Ghosn may have had questionable ethics, co-chair of external Nissan probe says

TOKYO (Reuters) - The co-chair of a committee set up by Japanese automaker Nissan Motor Co (7201.T) to examine the root cause of alleged financial misconduct by ousted chairman Carlos Ghosn said he believed Ghosn may have had questionable ethical standards.

Ghosn, charged with three counts of financial misconduct, has been detained in Tokyo since his arrest on Nov. 19. Ghosn denies the charges against him, which include understating his salary for eight years and temporarily transferring personal financial losses to Nissan’s books.

“Having read the report on the internal investigation, my initial impression was that the head of the company may have had questionable ethical standards,” committee co-chair Seiichiro Nishioka told a briefing late on Sunday after the panel held its first meeting.

Ghosn said on Sunday he would follow restrictions by authorities in Japan in exchange for his release from jail in the latest effort to persuade a court to grant him bail while he awaits trial.

Ghosn, in a statement released in New York, also said he looked forward to defending his reputation in court.

“Nothing is more important to me or to my family,” he said.

Nishioka, a former judge, added that he also saw problems with Nissan’s governance, including the process of determining compensation for directors.

The panel, comprising three Nissan external directors and four third-party members, expects to meet three or four times before making recommendations to Nissan’s board in March on how to tighten lax governance and approval processes for matters including director compensation and chairman selection.

All seven members attended the first meeting in Tokyo, including Jean-Baptiste Duzan, an external director based in France.

For four hours, they discussed issues with two people involved with Nissan including how power had been heavily concentrated with Ghosn for years, Nishioka said, and possible ways to avoid such focus in the future.

Nishioka added that such a concentration of authority in one person was “questionable”.

MOUNTING ALLEGATIONS

Nissan and partner Mitsubishi Motors (7211.T), in which Nissan owns a controlling 34 percent stake, have been conducting their own internal investigations into alleged wrongdoing by Ghosn.

On Friday both accused him of improperly receiving $9 million in compensation from a joint venture between the two automakers, raising the possibility that the former boss of the Nissan-Renault alliance could face a fresh charge of embezzlement.

Separate internal investigations have found evidence that a small group of people at both companies helped to carry out or approve transactions including secret compensation and payments on Ghosn’s handful of residences, people with knowledge of the matter have told Reuters.

The arrest of Ghosn, who spearheaded Nissan’s turnaround two decades ago, and the charges against him have jolted the auto industry, while muddying the outlook for Nissan’s three-way alliance with France’s Renault SA (RENA.PA) and Mitsubishi Motors.

Renault, which dominates the partnership through its 43.4 percent stake in Nissan, is expected to meet within days to consider potential candidates to replace Ghosn as CEO and chairman, sources have told Reuters.

Despite repeated requests by Renault that Nissan hold an extraordinary shareholders meeting as soon as possible to select a new chairman, Nissan plans to wait for the committee’s recommendations before making its nomination. Nissan’s annual shareholders meeting is scheduled for June.

Nishioka said the committee had yet to discuss possible procedures for chairman selection or governance issues related to the Nissan-Renault partnership including its capital structure. He did not rule out such discussions in the future.

France’s government, which holds a 15 percent stake in Renault and has long pushed for a closer tie-up between Renault and Nissan, has told Tokyo that it will seek an integration of the two companies, most likely under a single holding company, the Nikkei business newspaper reported on Sunday.

Meanwhile, Ghosn’s wife, Carole Ghosn, has written to French President Emmanuel Macron to discuss her husband’s situation, her public relations representative said.

FILE PHOTO: The logos of car manufacturers Renault and Nissan are seen in front of a common dealership of the companies in Saint-Avold, France, January 15, 2019. REUTERS/Christian Hartmann/File Photo

The representative, Devon Spurgeon, confirmed a report in French paper Journal du Dimanche that a letter had been sent to Macron this month, but declined to provide details.

Before his arrest, Ghosn had been working towards making the alliance “irreversible” and told Reuters in October that potential changes to the partnership’s structure would come by June 2020.

Nissan owns a 15 percent non-voting stake in Renault.

Reporting by Maki Shiraki and Naomi Tajitsu; Additional reporting by Sudip Kar-Gupta in Paris, Mike Spector in New York; Writing by Naomi Tajitsu; Editing by Dale Hudson, David Goodman and Lisa Shumaker